Old Guard Group Expects Earnings Loss From Storms

Old Guard Group Inc., a property and casualty insurer, is expected to post a second-quarter loss after tornadoes and thunderstorms in May and June cost it an estimated $2.1 million.

Old Guard is now expected to lose 33 cents a share in the quarter, according to a First Call Corp. poll of three analysts. Earlier, it was viewed as likely to earn 22 cents a diluted share in the quarter, First Call said. Analysts also cut their forecast for Old Guard's 1998 earnings to 43 cents a share from 97 cents.

"In any one quarter, (weather-related losses) can be significant and can skew results," said Chairman and Chief Executive David E. Hosler, who declined to comment on analysts' forecasts. Old Guard is "well equipped to handle this type of loss" because it is reinsured, he said Wednesday. The losses amount to between 54 and 57 cents a share.

Storms late last month and early in June caused deaths and between $3.6 million to $3.9 million in damage, excluding taxes and reinsurance, to houses and farms insured by the Lancaster-based Old Guard in its home state. Old Guard's property insurance is concentrated in Pennsylvania, Delaware and Maryland.

Old Guard fell -3/8 to 17-7/8 in trading of 31,400 shares, more than twice its daily average during the past three months. The company, once owned by policyholders, went public early last year under a 1995 state law.

Also last year, Old Guard decided to curb its vulnerability to storms in the mid-Atlantic region by pushing into other states and boosting its revenue from casualty insurance lines such as automobile and workers' compensation. "We have made progress," said Hosler, adding that Old Guard is growing faster in the casualty insurance business.

Old Guard is the latest insurer to warn investors that its storm losses will crimp second-quarter profits. Other companies issuing such warnings include Cincinnati Financial Corp., which Monday reported $40.3 million in pretax catastrophe losses.